Upload
nguyenlien
View
219
Download
3
Embed Size (px)
Citation preview
1
1
Energy Alternatives India @ www.eai.in
Blowin’ in the Wind
An Analysis of Opportunities in the Wind Power Value Chain
2
2
Energy Alternatives India @ www.eai.in
3
3
Energy Alternatives India @ www.eai.in
Preface
Greetings from Energy Alternatives India (EAI).
Hardly a day passes by without exciting updates on renewable energy in India. While solar is capturing
the headlines every day in this context, wind has been the silent winner all along.
With a total installed capacity close to 15 GW (fifth largest worldwide), constituting over 75% of the
total installed renewable energy capacity in the country, and with almost 3000 MW being added each
year, the growth of wind power in India has been very encouraging.
What makes the wind sector in India even more promising is the fact that the manufacturing ecosystem
for wind is growing strong and steady too. Except for a couple, every one of the top ten wind turbine
manufacturers in the world already has a manufacturing base in India. In parallel, the procurement of
components for wind turbine manufacturing from indigenous sources has been growing as well.
While the achievements of the wind sector have indeed been laudable, it is time for us to raise the bar.
The easiest way to do this will be to benchmark ourselves against China, a country which has raced to
the top both in terms of total wind power plant installations as well as manufacturing capacity. While
these two countries are significantly different in polity and markets, some lessons could surely be
transplanted from China to India. In addition to the China benchmark, we could also perhaps look at the
inherent strengths India has as a manufacturing base (our proven positioning as a high quality, medium
cost supplier) to explore specific opportunities within wind energy.
Being a premier research and consulting group with a dedicated focus on the Indian renewable energy
sector, the above considerations made us at EAI work on this white paper. This paper evaluates the
opportunities along the entire wind energy value chain, with a special focus on opportunities in
manufacturing. Done in conjunction with the Exhibitions India group for the 4th Renewable Energy
Conference – Wind Energy Edition in Coimbatore to be held on 16th Nov 2011, I hope this intelligence
document enables entrepreneurs and investors take investment decisions for productive opportunities
in wind energy.
I also take this occasion to wish the very best for the conference organizers and delegates.
Narasimhan Santhanam
Cofounder and Director
EAI – Energy Alternatives India @ www.eai.in
4
4
Energy Alternatives India @ www.eai.in
5
5
Energy Alternatives India @ www.eai.in
List of Contents
1. Introduction & Overview of the Wind Energy Industry in India ................................................7
1.1 Wind Industry - Status and Trends .....................................................................................7
1.2 Future Potential .................................................................................................................9
2. Wind Energy Industry Value Chain .........................................................................................10
2.1 Key Players in Wind Power Development.........................................................................11
2.2 Wind Energy Business Opportunities ...............................................................................12
2.2.1 Manufacturing Opportunities in Wind Energy ...........................................................13
2.2.2 Services & Support Opportunities..............................................................................16
2.2.3 Trading Opportunities ...............................................................................................20
2.2.4 Opportunities in R&D ................................................................................................20
2.2.5 Other Opportunities ..................................................................................................21
2.3 Summary .........................................................................................................................21
6
6
Energy Alternatives India @ www.eai.in
7
7
Energy Alternatives India @ www.eai.in
1. Introduction & Overview of the Wind Energy Industry in India
The development of wind power in India began in the 1990s, and has progressed steadily in the last few
years. The short gestation periods for installing wind turbines, and the increasing reliability and
performance of wind energy machines have made wind power a favored choice for capacity addition in
India. Currently, India has the fifth largest installed wind power capacity in the world. Wind power
accounts for about 8% of total installed power capacity and 70% of the total grid interactive renewable
energy in India. It is estimated that 7,500 MW of additional wind power capacity will be installed in India
between 2011 and 2015, taking the total installed capacity beyond 22GW1.
In addition to the progress made in wind turbine installed capacities, the progress of the overall wind
energy ecosystem has been encouraging as well. Pointers to this are the increasing number of
component manufacturers and the rapid utilization of India’s land for wind energy. While the growth of
wind power in India was largely driven by tax incentives until recently, it is expected that more IPPs
(independent power producers) will be interested in investing in this segment with the recent
announcement of generation-based incentives.
1.1 Wind Industry - Status and Trends
The growth of wind energy in India has been spurred by only a handful of states so far, with Tamilnadu
being by far the leader.
Potential vs. Installed Capacity
1 HSBC Global Research
8
8
Energy Alternatives India @ www.eai.in
Source: MNRE, IWEA
Installed Capacity Trends in Different States
Source: MNRE, EAI
It can be observed from the two charts that while Tamilnadu garners the most limelight currently owing
to its leading position in installed wind capacity, attention will quickly be shifting to states such as
Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Rajasthan where the gap between the available
potential and installed capacities are much higher than those for Tamilnadu. The first chart also
illustrates the inadequacies in the current potential estimates, which has resulted in the curious status
where the installed capacity of Tamilnadu is higher than its estimated potential! MNRE has recognized
this and in association with CWET is undertaking a project to re-evaluate the wind energy potential in
the country.
“Until recently, though the State had the potential, Karnataka was not so much in the
reckoning because policies were better in Tamil Nadu. However, policies are in place now
and companies are moving into Karnataka. Chennai-based Orient Green Power Ltd is one
such with plans to put up a 50 MW project at an investment of Rs 330 crore.” – Hindu
Business Line
9
9
Energy Alternatives India @ www.eai.in
1.2 Potential
The total potential for wind power in India was first estimated by the Centre for Wind Energy
Technology (C-WET) at 45 GW, and was recently increased to 48.5 GW. This figure was also adopted by
the government as the official estimate.
At heights of 55-65 meters, the Indian Wind Turbine Manufacturers Association (IWTMA) estimates that
the potential for wind development in India is around 65-70 GW. The World Institute for Sustainable
Energy (WISE) estimates that with larger turbines, greater land availability and expanded resource
exploration, the potential could be as high as 100 GW.
A 100 GW potential for wind energy significantly widens the attractiveness of the Indian wind energy
segment, given that the total installed capacity for electricity is India is about 160 GW.
In addition to this, significant potential exists in the offshore wind energy sector. In view of this, MNRE
has recently commissioned studies to estimate the potential of offshore wind in India which is to be
completed over the course of the next two years.
In the future, a significant portion of the capacity addition is also expected to come from repowering of
existing wind farms. This is due to the fact that most high wind energy density sites are already exploited
and are occupied (in most cases) by inefficient/poorly designed wind farms. Upgrading these wind farms
with better design as well as the use of more efficient turbines would result in the wind farms seeing
higher PLF thereby aiding in the realization of higher revenue. For example, Gamesa recently completed
replacing 11 old wind mills of 225 kW capacity each with three 850 kW turbines. As a result of this, the
capacity of the plant remained almost the same, but the PLF was much higher due to the fact that the
new turbines operated even at lower speeds, were more efficient and had little downtime.
Projected Benefits of Repowering Wind Farms
Existing Wind Farm After Repowering
Capacity 8.1 MW 8.5 MW
Estimated Annual Generation 104 lakh units 220 lakh units
Plant Load Factor 14.7% 29.5%
Source: Hindu Business Line, Gamesa, Indicative data only
It is estimated that about 1400 MW of wind power capacity was installed prior to
2002. These wind farms use outdated technology while occupying prime wind
energy density properties, leading to sub optimal electricity output.
10
10
Energy Alternatives India @ www.eai.in
2. Wind Energy Industry Value Chain
The wind energy value chain consists of a number of specific and distinct steps - from the supply of raw
materials to the transmission of electricity. These steps, along with the prominent supporting products
and services for each, are given below. The illustration below also provides a bird’s-eye view of the
opportunities available along the entire wind energy value chain.
Source: www.nextenergy.org
A detailed analysis of the various stages presented above and the products and services applicable for
each stage will also show how opportunities exist for a range of entrepreneurs at each stage. Except for
the “wind turbine companies” stage, which is a relatively concentrated OEM market with the top ten
players cornering a large share of the market (over 80% of capacity installed during 2010), the rest of the
stages could present ample opportunities for small and medium players.
A trend in the wind energy industry that entrepreneurs should be aware of is the move by incumbents
towards vertical integration along this value chain. And there is a reason for the vertical integration
efforts.
Turbines have been doubling in size every four years, and technology has been developing at excellent
speed, but the suppliers that had the right expertise, facilities and capacity to deliver on increasingly
challenging orders have been thin on the ground.
With supply chain bottlenecks a constant threat, many of the large wind firms have responded by buying
out suppliers of critical components such as blades, generators, and gearboxes. By bringing suppliers in
house, they could ensure they would get the products they needed on time, and at an acceptable price.
Vertical integration of the supply chain has been a gradual process over the last decade. Today, most
turbine manufacturers make their own blades, after a rush to bring them in-house four or five years ago.
Raw Material & Machinery Suppliers
Design & Development Services
Component Suppliers
Wind Turbine Companies
Construction & Installation Services
Wind Developers
Steel
Carbon fiber
Balsa wood
Fiber glass Other
materials
Machinery
Tooling
Design
Engineering
University research
Machining
Automation
Assembly
Gearbox
Bearing
Tower
Generators Blades
Electronics
OEMs
Large utility scale
Small wind
New wind energy designers
Turbine mfg licensees
Feasibility analysis firms
Project developers
Utilities
Engineering & procurement (EPC)
Construction companies
Transportation services
Operation & maintenance
11
11
Energy Alternatives India @ www.eai.in
OEMs including Vestas, GE, Gamesa, and Suzlon also have in-house supply of generators and controllers,
although they also still source some of these components from other suppliers.
Vertical integration has not always been a smooth process, however. An example is Suzlon’s acquisition
of Hansen Transmissions (a gearbox manufacturer) in 2006 and its subsequent sale to Germany’s ZF
Friedrichshafen AG in September 2011.
2.1 Key Players in the Wind Power Development
Key players with a role to play in wind energy development include: wind turbine manufacturers; wind
project developers; consultants and contractors; electric utilities, government agencies; and
landowners.
Wind Turbine Manufacturers: Large wind turbines are either sold directly by the manufacturer or by the
manufacturer’s regional dealers and distributors.
Wind Developers: Wind developers buy or lease windy land, finance the installation of wind turbines and
operate and maintain the turbines for an extended period. After a project is constructed, the wind
developer’s role varies. The developer may own and operate the wind farm, or merely operate the
project for a different owner.
Private Consultants and Contractors: Private consultants and contractors provide specialized skills or
knowledge. A consulting meteorologist can independently evaluate the wind resources at a site.
Engineering consultants can offer technical comparisons among competing wind turbines or provide
“due diligence” reports to banks considering loans for proposed wind projects. Contractors are often
needed for the construction phase of wind projects for tasks such as pouring concrete and erecting the
turbines.
Electric Utilities: The cooperation of electric utilities (mainly state electricity boards) is required to
interconnect wind turbines with the power grid. Selling electricity to a utility involves negotiations
between the power generator and the electric utility. These negotiations generally result in a contract
binding both parties to an agreement for a fixed amount of time. In India, state electricity boards
represent the main market for wind-generated electricity, whether they are interested in wind power
for their own purposes or are under obligations to invest in wind energy as mandated under the
Renewable Purchase Obligation wherein, a percentage of the total electricity generated/distributed
should be from renewable sources (a detailed list of the obligation requirement in various states is
available in annexure I). The RPO mechanism has encouraged big companies such as TATA power and
Jindal Steel & Power to set up large wind farms with capacities exceeding 100 MW.
Landowners: As the suppliers of windy land, landowners – especially in rural areas - can have substantial
influence over how wind energy develops. As the industry has grown, windy landowners and their
communities are gaining an understanding of the tremendous value of their wind resource and are
12
12
Energy Alternatives India @ www.eai.in
finding ways to keep more of the benefits in the local community. These methods range from farmers
negotiating better land leases with developers to local and community investments in wind projects.
With the anticipated removal of accelerated depreciation benefit, a large chunk of the incentives
available to the wind farm developer would be through the Generation Based Incentive (GBI)
mechanism. GBI stipulates that the higher the amount of electricity generated, the more the incentive
provided (i.e. incentive is provided per unit of electricity). This encourages wind farm developers to
setup power stations in high potential sites. With most of the high wind energy potential sites already
taken up, the price of land with high wind energy potential (usually farm land) is expected to shoot up.
2.2 Wind Energy Business Opportunities
Business opportunities in wind energy industry are available in manufacturing, services and trading.
Among these sectors, the widest range of opportunities is present in the manufacturing sector, followed
by services.
The analysis of business opportunities presented in this section is, to a large extent, not country specific,
but we have provided some notes in the Indian context.
13
13
Energy Alternatives India @ www.eai.in
2.2.1 Manufacturing Opportunities in Wind Energy
Manufacturing opportunities in wind exist in:
1. Raw materials production
2. Original equipment manufacturing
3. Component manufacturing
Raw Materials Production
A wide range of materials are used for wind
turbine construction. Steel is one of the most
important materials because of its strength
and durability. Turbines are primarily made
of steel, which accounts for 90% of the
machine by weight. A single 1 MW utility
scale wind turbine tower is constructed from
an estimated 100 tons of steel, and larger
turbines use a significantly greater amount of
steel. The rotor is constructed from
approximately 45% steel, with the hub being
made of 100% steel, and the blades being
made up of 2% steel and a combination of
fiberglass (78%) and adhesive (15%). Steel
accounts for between 87% and 92% of
nacelle components (American Wind Energy
Association, 2009).
While steel is perhaps the most important
material in this context, a diverse list of raw
materials are required to produce the vast
number of components that comprise a wind
farm. The following illustration provides a
detailed review of the materials and
components used in the production of wind
turbines.
Raw Materials Required for Wind Turbine
Components
Source: CGGC, based on industry sources and company
websites.
There is a move in India to indigenize wind turbine component production; this could lead to significant
opportunities for suppliers of raw materials that go into the production of these components. Indian
producers of the above raw materials should hence explore how they can become suppliers to this
sector.
Materials
Components
Steel
Teflon (PTFE)
Cast
Iron
Glass fiber reinforced
plastics Carbon filament
reinforced plastics Fiberglass
Concrete
Permanent magnetic
materials
Ceramics
Brass
Aluminum
Copper
Carbon fiber
Rubber
Wood Epoxy
Ferrite
Rotor
- Blade - Blade extender - Pitch drive - Hub - Shaft
Nacelle and Controls
- Nacelle
- Controller
- Anemometer
- Wind vane
Generator and Power Electronics
- Generator
- Drive train
- Gearbox
- Yaw mechanism
- Bearing
- Break
- Transformer
Turbine Tower
-Tower
-Base
- Flanges and bolts
-Ladder and lifts
14
14
Energy Alternatives India @ www.eai.in
Original Equipment Manufacturing
In the wind energy sector, turbine manufacturers represent the predominant OEM segment. The top 10
OEMs in the wind energy industry (by market share, 2010) are: Vestas, Sinovel, GE Wind Energy,
Goldwind, Enercon, Suzlon Group, Dongfang Electric, Gamesa, Siemens Wind Power and United Power.
OEMs usually manufacture some of the critical components such as the nacelle in-house, and blades and
towers are produced either by the OEM or fabricated to the OEM’s specifications by a supplier.
Typically, the wind project developer’s contract with the OEMs for the delivery of the complete wind
turbines include the nacelle, blades, and turbine tower, which are transported from the manufacturing
facility directly to the wind farm construction site.
Supply chain of the top wind turbine manufacturers
Turbine
Manufactuerer
Rotor Blades Gearbox Generators Towers Electrical Controllers
(VSE)
Clipper Tecsis Clipper Potencia Emerson,
Anston
Clipper
Enercon Enercon Direct drive Enercon KGW,
SAM
Enercon
Gamesa Gamesa, LM Echesa (Gamesa),
Winergy, Hansen
Indar
(Gamesa),
Cantarey
Gamesa Ingelectric (Gamesa
GE LM, Tecsis Winergy, Bosch
Rexroth, Eickhoff,
GE
Loher, GE DMI,
Omnical,
SIAG
GE
Nordex Nordex Winergy, Eickhoff,
Maag
Loher Nordex,
Omnical
Nordex, Mita Tekni
RE Power LM Winergy, Renk,
Eickhoff
Mita Teknik,
ReGuard
Siemens Siemens, LM Winergy ABB, Siemens Roug,
KGW
Siemens, KK
Electronic
Suzlon Suzlon Hansen, Winergy Suzlon,
Siemens
Suzlon Suzlon, Mita Teknik
Vestas Vestas, LM Bosch Rexroth,
Hansen, Winergy,
Moventas
Weier (Vestas),
Elin, ABB,
LeroySomer
Vestas,
NEG,DM
Cotas (Vestas), NEG
(Dancontrol
Source: GWEC
Competition among wind turbine OEMs has increased substantially as the wind power industry has
expanded. In addition, as noted earlier, there has been a significant trend towards vertical integration in
the wind energy industry and this could see OEMs producing more of the components themselves.
15
15
Energy Alternatives India @ www.eai.in
While opportunities do exist for new OEMs in India with the projected continuous growth in the wind
industry, it should be noted that this is an area that faces intense competition from large global
companies, and entering the OEM domain will require significant capital and marketing investments.
Acquisitions could be one of the ways for a medium or large business group to enter the OEM market.
An example of this is the acquisition of controlling stake in WinWind Oy, a Finnish manufacturer of wind
turbines, by Siva Group of India in 2006.
To encourage indigenous manufacturing of wind turbines and to facilitate transfer of new technology,
MNRE is expected to introduce local content requirements for wind turbines.
Component Manufacturing
Component manufacturers manufacture a wide range of mechanical and electrical components,
including generators, hydraulics, sensors, hardware, drives, power distribution, composites, cabling, big
steel, castings, forgings, bearings, gearboxes.
The primary components in a wind energy generating system are:
Rotors and Blades
Nacelle and Controls
Generator and Power Electronics
Tower Components
Sub-components for each of these components are provided in the earlier illustration.
A modern wind turbine consists of about 8000 unique components. Such components and related
services are supplied by an estimated 25 to 30 highly specialized companies in India in addition to a
large number of international suppliers. Companies involved in component manufacturing for the wind
power industry range from OEMs such as Vestas, Suzlon, and GE Energy to smaller firms.
Many of the components used in wind turbines are “generic” components – examples of such “generic”
components include brakes, ladders, bearings, shafts etc. For Indian firms that are already producing
components that could be supplied to the wind energy industry with minor customizations, component
manufacturing could be a very attractive avenue, as these firms will able to use their existing skills and
assets to quickly diversify to become suppliers for the wind sector. The interest shown towards higher
indigenization for wind turbine components also makes the component manufacturing segment an
attractive one for Indian businesses.
“Turbines made by companies that sell more than 15 megawatts of machines in India
without establishing an “adequate manufacturing facility” may be uprooted at their
owners’ cost and will face “heavy” penalties” – MNRE draft guidelines as reported by
Bloomberg Businessweek
16
16
Energy Alternatives India @ www.eai.in
Some of the components which contribute significantly to the cost of the wind farm are specified in the
table below. For a detailed list, refer Annexure II
Cost breakup of various components in a wind farm
Reference Year 2010
Annual Installation (MW) 2003
Cost (Billion INR.) %
Total Station Cost 79.28 68.3%
Blades 11.62 10.0%
Gearbox 11.70 10.1%
Tower 13.57 11.7%
Variable Speed Electronics 9.10 7.8%
Generator 7.49 6.5%
Others 25.8 22.2%
Total BoS Cost 36.87 31.7%
Electrical Interface/Connections 9.33 8.0%
Grid Connection 8.01 6.9%
Others 19.53 16.8%
Source: NREL
2.2.2 Services & Support Opportunities
While manufacturing opportunities are the most prominent in the wind energy industry, a range of
service opportunities are available as well.
Broadly, the services opportunities could be categorized into:
Feasibility studies and project development
Geotechnical services
Logistics support for wind farm
Construction opportunities
Operations and maintenance
Unique opportunities
17
17
Energy Alternatives India @ www.eai.in
Feasibility Studies and Project Development
Wind farm developers are responsible for developing the wind project from concept to commissioning,
and they undertake all the planning, design and project development work in this regard. Some
developers perform services beyond the commissioning stage as well, such as operations and
maintenance support.
As part of their role, wind power project developers also take up the role of establishing access to
capital for investment. In addition, they also assist in the construction of roads and related
infrastructure that can accommodate the transport of heavy industrial equipment and components.
Depending on the nature of contract, the wind project developer sometimes has a managing interest in
the project when it is complete, but in most cases the real ownership lies with the wind farm owner.
Wind power feasibility studies and project development for commercial-scale wind farms is a
multifaceted, lengthy process, often requiring collaborative efforts among several companies. Project
developers perform the following:
Wind power feasibility analysis,
Site selection,
Wind farm design and layout,
Wind turbine selection and acquisition,
Obtaining state permits,
Construction contracting,
Acquiring wind rights and leases,
Energy production estimates, and
Project financing
All the above present opportunities for Indian entrepreneurs keen on benefitting from the wind energy
sector. While some integrated wind energy companies such as Suzlon provides most of the above-
mentioned services, opportunities are available for other businesses to be sub-contractors to such
companies for some of the services.
Geotechnical Services
Geotechnical services deals with the geological analysis and examines the suitability of a certain location
for the proposed wind farm infrastructure. These services mainly include the analysis of the stability of
the subsoil and foundation advice.
While geotechnical services are a part of project development, owing to the specific importance that
these services carry in the context of wind farms, this has been mentioned as a separate section.
For onshore wind farms, geotechnical services include:
18
18
Energy Alternatives India @ www.eai.in
Geotechnical and geo hazards aspects of site selection, master planning and environmental impact assessment and management
Geotechnical and geo-environmental site investigation, including terrain evaluation and contaminated land assessment
Foundation and ground improvement design for static and dynamic load conditions
Access road and cable routes - selection, investigation and design
Geo hazard assessment and mitigation – unstable slopes, surface and groundwater, seismic hazards.
Site reinstatement and restoration, including erosion control and planting regimes
Construction supervision
Due diligence and expert witness services
As mentioned earlier, integrated wind energy companies provide the above services as part of their
development portfolio, but opportunities exist for Indian construction and civil engineering companies
to be sub-contractors for specific services.
Offshore wind farms could require a few more geotechnical services, in addition to most of what are
required for the onshore wind farms:
Foundation and design assessment
Subsea cabling
Sea bed geotechnical service
Currently, offshore wind is in its infancy in India and is more relevant to countries in north Europe and to
a certain extent, for the United States. It is however expected that the offshore wind industry could start
gaining momentum during the next few years, so entrepreneurs will do well to watch that space.
Logistics Support for Wind Power
Transporting wind turbines presents unique challenges and opportunities. Transporting these machines
involves handling components that have an unusual weight, length and shape; thus companies that
serve the industry must have equipment to transport very large and heavy cargo. The nacelles, blades,
and turbine towers must be transported from the manufacturing facility to the wind farm location. The
wind turbine industry needs to rely on collaborative transportation management processes, whereby
manufacturers, logistics companies, transportation companies, and shipping ports share information
and integrate their functions to achieve an effective delivery process (Tremwell & Ozment, 2007).
Modes of transportation for the wind industry include trucking, shipping and rail freight.
There are considerable opportunities for transportation providers in all sectors to serve the industry. A
single wind turbine can require up to eight hauls, and for a large project of 150 MW, transportation
requirements could be as much as 689 truckloads, 140 railcars, and eight ships (Tremwell & Ozment,
19
19
Energy Alternatives India @ www.eai.in
2007). As the wind power industry continues to grow, demand increases for companies that are capable
of transporting heavy and large loads. This could lead to the emergence of a specialized sector in the
transportation industry.
Construction Opportunities
Turnkey construction contractors provide engineering, procurement and construction services, including
civil works, laying cables for electrical infrastructure, and installing wind turbines.
Over the past decade, a number of construction companies in India have contributed to and benefitted
from the wind energy sector growth, and this trend is expected to continue in future as well.
Operation and Maintenance
The reliability of the turbine system is essential to a wind power project; thus, operation and
maintenance (O&M) services are critical. Operations include scheduling site personnel, observing
turbine operation, dealing with equipment failure, and coordinating with the utility to respond to
curtailments or outages (Walford, 2006). Maintenance includes both scheduled (preventive) services,
such as periodic equipment inspections, oil and filter changes, calibration of electronic sensors, blade
cleaning, and unscheduled services to repair component malfunctions.
When wind turbines are installed and the wind farm is in use, routine maintenance is important to
ensure maximum efficiency and lifespan of the machines. Generally, wind turbine manufacturers’
service turbines during the first 2-5 years while the wind turbines are still under warranty. Thereafter,
wind farm operators may perform maintenance on their own, or subcontract the service to independent
service companies (Wittholz & Pan, 2004).
Some companies in India are focused on offering only repair and maintenance services to existing wind
farms, as they see a potential to add significant value owing to their focus. In future, one can also expect
companies specializing in the repair and maintenance of specific wind turbine components, for instance,
just the gearbox.
Unique Opportunities
With its fast pace of growth, even a mature sector such as wind could open up unique opportunities in
future. For instance, the growth in offshore wind could provide opportunities even for sectors such as
helicopter aviation sector, where helicopter services could be required under certain conditions for the
maintenance of offshore wind farms.
20
20
Energy Alternatives India @ www.eai.in
2.2.3 Trading Opportunities
Trading opportunities – in the form of value added sales - for wind energy components and parts are
presently limited owing to the way the industry supply chain is structured – most of the parts procured
are business-to-business transactions with the OEMs directly procuring from the component
manufacturers. Should a market for micro-wind turbines emerge in future, opportunities could arise for
traders and small system integrators, similar to what is happening in the solar PV industry in India where
rooftop solar systems are set to take off soon.
Opportunities to trade in the power produced are however likely to expand significantly. Currently, it is
possible for wind power producers to sell electricity to the grid, use it for captive consumption or sell it
to third parties. With the emergence of independent power exchanges and with the likely liberalization
and streamlining of power distribution across states, the opportunities to trade in power are likely to
increase and become more lucrative.
With the advent of the RPO/REC mechanism in India, there has been significant demand for non-solar
(wind, small hydro, biomass etc.) over the past few months. The high demand for non-solar RECs is
mostly met through wind energy based REC. In light of this, REC accreditation, advisory and trading
services present a significant opportunity waiting to be capitalized.
2.2.4 Opportunities in R&D
Relative to solar photovoltaic, which has seen tremendous and disruptive innovations in the last two
decades – in the form of thin film, concentrated PV, dye-sensitized solar cells, etc – the innovations in
the wind industry have been more incremental in nature.
This is not to infer that there have been no significant innovations. Tremendous progress have been
made in the context of gearless wind turbines, original concepts such as the FloDesign’s Jet Engine-
inspired Wind Turbine, attempts at vertical axis wind turbines for utility scale, innovation in wind towers
resulting in significant reduction in amount of materials used, innovations that are attempting to
increase the efficiency of generators (ex: ExRo), and interesting innovations in wind turbine blades ( ex:
shape-shifting blades designed by Purdue University and Sandia National Laboratories).
Other innovations include the development of the vertical axis wind turbine (VAWT). Researchers at
CalTech have conducted studies that setting up wind farms with smaller (as compared with traditional
turbines) VAWT help in exploiting the typically lower wind velocities at lower altitudes. Further, these
turbines can be placed closer together thereby increasing the energy density by reducing the turbines’
footprint. The research indicates that these turbines could provide as much as 10 times the power
output of traditional wind farms.
The above inputs on innovations point to the range of opportunities that exists for R&D within the wind
energy sector. Large wind energy companies have their own dedicated R&D teams, but research
opportunities also exist for Indian entrepreneurs and businesses that have research in their business
DNA.
21
21
Energy Alternatives India @ www.eai.in
2.2.5 Other Opportunities
Some of the other opportunities along the value chain include:
Leasing Land
When you lease your land to a wind energy developer, you receive compensation for the commercial-
scale project on your land. The land owners usually perform feasibility studies on the land and provide
micro siting/ wind flow data for that region thereby guaranteeing performance.
Insurance Services
Companies specializing in underwriting, loss adjusting and risk engineering wind power projects provide
insurance services. These include:
Insurance Cost Estimating
Insurance Brokerage/ Risk Management
Contract Review/ Analysis/ Document Drafting
Underwriting/ Marketing
Fire Protection/ Property Preservation
Risk Assessments
Life/ Safety Risk Control
HVDC Transmission Systems
The emergence of the offshore wind energy market presents a significant opportunity for companies
involved in setting up of transmission and distribution infrastructure. Offshore wind farms are usually
located a few kilometres off the mainland and hence efficient evacuation of power from these farms
pose a significant problem. High Voltage DC (HVDC) transmission systems aim to overcome this problem
by providing a means of highly efficient power evacuation from offshore wind farms. Companies such as
ABB have already won large orders in this emerging field. For instance, in July 2011, ABB won an order
worth $700 million to supply a 800 MW HVDC power link to connect an offshore wind farm to the
German grid.
22
22
Energy Alternatives India @ www.eai.in
2.3 Summary
India is already a leading player in wind energy. Estimates suggest that the potential for wind energy in
India could be much higher than current estimates, with larger turbines operating at increased heights.
This is likely to ensure an even faster for the wind energy sector in India.
The growth in wind energy sector is expected to bring forth a whole range of opportunities for Indian
entrepreneurs and businesses, and these opportunities are present along the entire wind energy
business value chain. Significant opportunities are expected to open up in the manufacturing segment,
especially for the manufacture of wind turbine components, with a move towards greater indigenization
in the wind industry. Attractive opportunities – some of which are niche in nature – are available in the
services sector as well, and these opportunities are available for diverse entities such as small
businesses, landowners and entrepreneurs.
A brief analysis of the opportunities in manufacturing of components used in the wind turbines throw
up interesting insights. Blade manufacturing involves a high level of technical expertise, hence this
requires significant capital costs for entry. For gearboxes and generators, while the market demand is
significant, it should be noted that there are large and well entrenched players in these segments, and
thus there exist high entry barriers for new companies. The tower segment is quite fragmented, and is
currently being catered to by small and medium companies, thus offering attractive opportunities for
newcomers. Outside of these, a number of subcomponents are not yet well researched, and these are
indeed the ones that could present significant business opportunities to small and medium businesses.
We thus see that the opportunities and risk profiles in component and sub-component manufacturing
are diverse.
Outside of the traditional repair and maintenance opportunities, other unique opportunities could open
up in the service industry. With the possible emergence of offshore wind in future, there could be
service opportunities for diverse businesses.
Trading opportunities for products are limited currently owing to the current structuring of the industry
supply chain, but with the opening up of the Indian electricity sector, wind power producers can expect
more options available for the trading of the power produced by them.
23
23
Energy Alternatives India @ www.eai.in
Annexure I
Tariff rates and RPO of various states in India
Table: Comparison of Tariffs and Policies for Wind Power in Key States
States Tariff rates per KWh
Annual tariff escalation Percentage Renewable Portfolio Standard for Wind
Andhra Pradesh Rs. 3.50 Constant for 10 years for the PPAs to be
signed during 01-05-09 to 31-03-2014
5% for all RE(2011/2012)
Gujarat** Rs. 3.56 No escalation for 25 years of project life 5% (2011/2012)
5.5% (2012/2013)
Haryana Rs. 4.08 With 1.5% per year for 5th years 10% (2010/2011) for all RE
Karnataka* Rs. 3.70 No escalation for 10 years 7-10% (2010/2011) for all RE
Kerala Rs. 3.60 No escalation for 20 years of project life 3% (2011/2012 &2012/2013) for all RE
Madhya Pradesh**
Rs. 4.35 No escalation for 25 years of project life 6% (2011/2012)
Maharashtra Wind Zone I-Rs. 5.07
Wind Zone II-RS. 4.41
Wind Zone III-Rs. 3.75
Wind Zone IV-Rs. 3.38
No escalation for 13 years 7% (2011/2012)
8% (2012/2013) for all RE
Orissa Rs. 5.31 No escalation for 13 years 5% for all RE (2011/2012)
24
24
Energy Alternatives India @ www.eai.in
Punjab Rs. 3.49 With base year 2006/07 with 5 annual
escalation @5% up to 2011/12
4% for all RE (2011/2012)
Rajasthan** Rs. 3.87 &Rs. 4.08
No escalation for 25 years of project life
Rs. 3.87 for Jalsalmer, Jodhpur &Balmer
districts while Rs. 4.08 for other districts
7.5% (2011/2012)
Tamil Nadu Rs. 3.39 No escalation for 20 years of project life 14% for all RE (2010/2011)
Uttarakhand Wind Zone I-Rs. 5.15*
Wind Zone II-Rs. 4.35*
Wind Zone III-Rs. 3.65*
Wind Zone IV-Rs. 3.20*
Rs. 5.65 for first 10 years &Rs. 3.45 for
11th year onward
Rs. 4.75 for first 10 years &Rs. 3.00 for
11th year onward
Rs. 3.95 for first 10 years &Rs. 2.55 for
11th year onward
Rs. 3.45 for first 10 years &Rs. 2.30 for
11th year onward
4.53% for all RE (2011/2012)
West Bengal* Rs. 4.87 No escalation for 10 years 3% for all RE (2011/2012)
*RPS for Bengaluru Electricity Supply Company Ltd (BESCOM), Mangalore Electricity Supply Company Ltd
(MISCOM), Calcutta Electricity Supply Company Ltd (CISCOM) is 10% while for HebM Electricity Supply Company
Ltd (HESCOM) and Hukari, it is 7%
**RPS specific only for Wind
25
25
Energy Alternatives India @ www.eai.in
Annexure II
Detailed Cost Breakup and Projections for Various Components of a Wind Farm
The data also represent the possible revenues to manufacturers of each component; the total cost of a 1 MW wind
turbine is taken as a constant for the five years under study.
Year 2011 2012 2013 2014 2015
Annual Installations (MW) 2273.42 2613 3003 3452 3967
% of total Estimated Costs (Billion INR.)
Total Station Cost 68.3% 89.98 103.42 118.85 136.62 157.01
Rotor 15.3% 20.22 23.24 26.70 30.70 35.28
Blades 10.0% 13.19 15.16 17.42 20.03 23.01
Hub 2.8% 3.73 4.29 4.93 5.67 6.51
Pitch & bearings 2.5% 3.30 3.79 4.36 5.01 5.75
Drive train, nacelle 40.9% 53.97 62.03 71.29 81.95 94.17
Spinner, Cone 0.3% 0.35 0.40 0.46 0.53 0.61
Low speed shaft 1.4% 1.82 2.09 2.41 2.77 3.18
Bearings 0.8% 1.04 1.20 1.38 1.58 1.82
Gearbox 10.1% 13.28 15.26 17.54 20.16 23.17
Mech brake,
HS coupling etc 0.2% 0.26 0.30 0.34 0.40 0.45
Generator 6.5% 8.50 9.77 11.23 12.91 14.84
Variable speed
Electronics 7.8% 10.33 11.87 13.64 15.68 18.02
Yaw drive & bearing 1.3% 1.74 1.99 2.29 2.64 3.03
Main frame 6.1% 8.07 9.27 10.66 12.25 14.08
Electrical connections 3.9% 5.21 5.98 6.88 7.90 9.08
Hydraulic,
Cooling system 1.2% 1.56 1.80 2.06 2.37 2.73
Nacelle cover 1.4% 1.82 2.09 2.41 2.77 3.18
Control, Safety System 2.3% 3.04 3.49 4.01 4.61 5.30
Tower 11.7% 15.40 17.70 20.35 23.39 26.88
Total Balance of Station Cost 31.7% 41.85 48.10 55.28 63.55 73.03
Financial Cost 0.7% 0.92 1.05 1.21 1.39 1.60
Grid Connection 6.9% 9.09 10.45 12.01 13.80 15.86
Foundations 3.0% 3.99 4.59 5.27 6.06 6.96
Transportation 3.3% 4.34 4.99 5.73 6.59 7.57
Roads, Civil Work 5.2% 6.85 7.88 9.05 10.41 11.96
Assembly & Installation 2.5% 3.30 3.79 4.36 5.01 5.75
Electrical Interface/
Connections 8.0% 10.59 12.17 13.98 16.07 18.47
Engineering & Permits 2.1% 2.78 3.19 3.67 4.22 4.84
Total Cost/ MW (INR Million) 100.0% 57.98 57.98 57.98 57.98 57.98
Source: NREL, EAI
26
26
Energy Alternatives India @ www.eai.in
EAI - Assisting Your Company for Attractive
Manufacturing Opportunities in Wind Power Sector
The Wind Team at EAI has worked extensively on all segments of the wind energy value
chain. With our exceptional understanding of the Indian wind energy industry and our
partnerships with technical industry experts, EAI will be the ideal research and consulting
partner for your company’s foray into wind energy manufacturing.
EAI offers intelligence on manufacturing opportunities in the Indian wind sector
Core components – Blade, Gearbox, Generators
Support Components – Mainframe, Shaft, Tower
BoS Manufacturing – Variable Speed Electronics, Power Conditioning Systems,
Monitoring Systems
Small Scale Wind Turbines
Identifying the most attractive opportunities for your company
Understanding your company’s aspirations in the context of wind energy sector
Understanding your company’s manufacturing competencies
Evaluating the fit between your aspirations + competencies and the available
opportunities
Clearly identifying the attractive opportunities appropriate for your company
Feasibility study for shortlisted opportunities
Demand and supply analysis
Costs and returns estimates
Strategic dimensions and key success factors – extent of competition, buyer and
supplier power, dominant designs and industry concentration, degree of innovation,
barriers to entry
Possibilities of JVs and technology partnerships
Identification of key success factors
27
27
Energy Alternatives India @ www.eai.in
EAI Strengths
In-depth wind sector knowledge – Our team has worked along the entire wind energy
value chain
Dedicated Focus on Renewables - We work only in renewable energy, and nothing else.
Wide Expert Network - We work with over 100 technical and business experts across all
primary renewable energy sources.
Financial Assistance - We work with over 25 different PE, VC firms and banks providing
our client easy access to finance.
Clients
EAI's consulting team has been assisting several organizations in diverse renewable energy
domains. Some of our esteemed clients include:
PepsiCo
Reliance Industries
World Bank
Sterlite Technologies
Bill & Melinda Gates Foundation
iPLON GmbH
Minda Group
GE
Bhavik Energy
Agarwal Group
Prominent companies that have benefitted from our research and reports:
Accenture
AT Kearney
Shell
Lafarge
Exxon Mobil
Boston Consulting Group
Schneider Electric
Bosch
GE
Danfoss Solar
IFC
Siemens
Sharp
Gehrlicher Solar AG
Reliance Solar
Emergent Ventures
Videocon
Q Cells
Emerson Network Power
Indian Railways
28
28
Energy Alternatives India @ www.eai.in
Business Intelligence Reports
EAI India Solar PV Advisor
This comprehensive report has been prepared for companies and businesses keen on investing in the
Indian solar photovoltaic based power plants.
Investments and returns required for solar PV projects in India
Government incentives and mandates
Indian Solar PV market status and forecast
EAI India Solar PV Modules Market Intelligence
This report provides extensive market data, insights and perspectives for the fast growing solar PV
modules sector.
Global and Indian supply-demand data for solar PV modules
Cost data for setting up solar PV module production plants
Government regulations and incentives
Replacing Diesel with Solar
Market scenario, technical and market feasibility inputs for companies, industries and institutions keen
on solar PV based captive power as a replacement for diesel .
Key market segments for solar PV captive power production
Cost data for setting up captive solar power plants
Government incentives
India Biomass Gasification Based Power Production
A detailed report providing complete techno-economic details for biomass gasification based power
production.
Detailed inputs on cost and economics.
Data for various biomass feedstock that could be utilized.
Case studies and examples of biomass gasification in India.
For more information on how EAI can be of assistance to you, contact:
Badri Narayanan
Energy Alternatives India
91-9042329344 / 91- 9043539679